By J.P. Dahdah, Founder & CEO of Vantage
Diversification is one of the proven and tested ways to minimize risks and losses. So, if you’ve decided to diversify your self-directed IRA, here are 3 top ways to do just that:
1. Diversify by location. Location is a key factor when it comes to real estate. A property’s valuation largely depends on the neighborhood. Location may pertain to specific places like a state or city, or its nature, whether commercial, residential, or industrial. If you want to invest on a global basis, you should consider the socio-political and economic climate of the foreign country in which you want to invest.
2. Diversify by type. Different investment types will provide Self-Directed IRAs with different sources of income. You may opt for either direct or indirect investments or use a combination of both. Direct investments in real estate often come through acquisitions or other transactions that relate to ownership or possession, like lease contracts. Indirect investments may be done without physically acquiring lands or buildings through investments in stocks, debt or other methods, like real estate investment trusts (REITs).
3. Diversify by asset. Complementing your real estate portfolio with other non-real estate assets may also be a great option. Fixed income securities, such as bonds, provide steady and predictable income, while investments in equities provide more room for income growth. Remember that real estate is an industry itself, making it prone to volatility within its market.
By using these ideas to allocate your Self-Directed IRAs, you will be able to minimize risks and maximize growth while having fun in selecting them!
For more information on how you can discover your IRA investing alternatives, contact our team at (866) 459-4590 or ClientService@VantageIRAs.com.